M/S Synchrony International Services PVT. LTD. vs. Assistant Commissioner (St)

Held

The High Court held that the summary sheet containing details of refund claims allowed as per orders-in-original/appeal for the relevant tax periods, and the claim for refund of interest thereupon, should be produced before the Proper Officer for scrutiny and sanction. The Court directed the petitioner company or its authorized representative to appear before the Proper Officer on August 6, 2026, with relevant details. The Proper Officer was instructed to scrutinize the claim and take a decision in accordance with the law within two weeks thereafter, specifically without insisting upon the certification as required under Rule 89(2)(m) of the CGST Rules, as the claim related only to the interest component over the already sanctioned refund. The Court found that the insistence on Rule 89(2)(m) was unnecessary in this specific context of claiming interest on delayed refund.

Facts

The petitioners, M/s Synchrony International Services Pvt. Ltd. and its Director, filed multiple writ petitions challenging the rejection of their applications for interest on delayed refunds. The Assistant Commissioner (ST) rejected these applications via Deficiency Memos dated November 12, 2025. The petitioners sought interest on delayed refunds amounting to INR 2,13,76,711 (in WP 12047/2026) and INR 41,04,049 (in WP 12052/2026), calculated from 60 days after the first refund application date until the final refund payment date, at rates of 6% and 9% as applicable. The core of the dispute lies in the procedural requirements for claiming such interest, specifically concerning Rule 89(2)(m) of the CGST Rules.

Key Issues

1. Whether the rejection of the petitioner's application for interest on delayed refund by the Assistant Commissioner (Respondent No. 1) was illegal, arbitrary, perverse, violative of principles of natural justice, and without jurisdiction, as alleged by the petitioner? 2. Whether the insistence on a certificate under Rule 89(2)(m) of the CGST Rules by the revenue authorities for a claim solely for interest on delayed refund is legally tenable, given that the principal refund amount has already been disbursed? Petitioner's Arguments: The petitioner contended that the rejection of their interest claim was illegal and arbitrary. They argued that the insistence on a Chartered Accountant's certificate under Rule 89(2)(m) of the CGST Rules was unnecessary for a claim solely for interest on delayed refund, especially since the principal refund had already been disbursed and the interest component could not have been passed on to any end consumer. They asserted that the interest should have been computed and paid in terms of Section 56 of the CGST Act. The petitioner relied on the fact that the entire refund amount had been disbursed pursuant to orders-in-original and orders-in-appeal. Revenue's Arguments: The revenue, represented by the Special Government Pleader, referred to Circular No. 25/44/2019-GST dated 18.11.2019, adopted by the State Tax Department. They argued that the refund application must conform to certain requirements, and the deficiency memo pointed out the non-submission of documents required under Annexure-A to the circular, specifically an undertaking related to Section 16(2)(c) and Section 42(2) of the CGST Act, and either a self-declaration under Rule 89(2)(l) or a certification under Rule 89(2)(m) if the refund claim exceeded Rs. 2,00,000.